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HW v WW [2021] EWFC B20

The Covid 19 pandemic is capable of being a Barder event, but the impact of the pandemic on the parties’ company was reasonably foreseeable at the date of the consent order and the husband’s set-aside application was dismissed.

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The parties agreed a consent order at an FDR on 12 March 2020, whereby the wife ("W") would retain the FMH and the husband ("H") would retain the parties' jointly owned company, which distributed commercial printers and copiers. W was to receive 40% of the available capital on the basis that H's choice to retain the company carried greater risk (and greater potential reward). The consent order included provision for H to pay W £1,000,000 by 12 April 2022 with the first lump sum of £750,000 payable by 10 June 2020.

H applied to stay the lump sum provision for 12 months on 5 June 2020 due to cash flow deficiencies in the company. W sought enforcement of the consent order. H applied to set aside the order in its entirety in November 2020, on the basis that "circumstances that were unforeseen and unforeseeable have significantly changed the assumptions upon which the Order was made". H estimated that the value of the company had fallen from £3,500,000 (as assessed by an SJE for the FDR) to £1,265,000 and claimed he had no prospect of raising the lump sum due.

HHJ Kloss accepted that the Covid 19 pandemic and its impact upon a key asset is a potential Barder event opening the door to set aside an order. The pandemic may be something unforeseen and unforeseeable occurring since the date of the hearing and altering the value of assets so dramatically as to bring about a substantial change in the balance of assets brought about by the order (Cornick v Cornick [1994] 2FLR 530). In this case, the "event" is the Covid 19 pandemic and the consequential impact upon the value and liquidity within the company.

H had to prove that the event was unforeseen and unforeseeable. The test for foreseeability was whether as at 12 March 2020 H could reasonably have foreseen a risk that the Covid 19 pandemic might have a significant impact upon the trading position of the company.

HHJ Kloss determined that the risk to the company was reasonably foreseeable at FDR because the Covid 19 pandemic was developing by 12 March 2020. H is an experienced and successful businessman and would have seen that the UK business world was preparing for disruption, emergency economic measures were being taken all over the world, and the stock market was falling dramatically. It is not required that the full extent of the impact of the event was foreseeable.

The SJE identified risks to the company in his report (e.g. Brexit, currency fluctuations, loss of exclusive distribution, paperless office) and had they come to pass H could not have sought to set aside the order, however severe the impact. H cannot be put in a better position with respect to the impact of Covid 19 than to other risks.

A Barder application must look to the long term and not a snapshot in time. The change to the company was to be evaluated by reference to the 'broad guide' of the SJE valuation, while looking to the long term and viewing the assertions of the party seeking to resile from the order with a healthy degree of scepticism. The court must ask whether the changes are so dramatic and fundamental to justify the reopening of a final order, designed to bring an end to proceedings. The change to the value of company was not fundamental enough to meet the deliberately high Barder test because the company remains viable and profitable, particularly in the long-term.

Case summary by Beth Hibbert, pupil barrister,1GC Family Law